Category: ComfortDelgro
ComfortDelgro – Kim Eng
Steady performer
Event
• ComfortDelgro reported in‐line 2Q10 results. Net profit rose by 1.6% YoY and 7% QoQ, powered by the Australian bus operations (+34%), the China driving centres (+15.5%) and the Singapore rail (+15%), taxi (+9%) and bus (+4%) services. The bottom line was hardly affected by forex translation as the weakness in the pound and the renminbi was offset by the strength in the A$. Operating margin improved despite
higher energy costs as revenue rose faster than overall operating expenses. Interim dividend was higher at 2.7 cents a share.
Our View
• ComfortDelgro’s train and taxi services in Singapore will continue to thrive on the Republic’s vibrant tourism scene. Train revenue in 2Q responded well to a 14% jump in ridership on the North East Line, which ends at HarbourFront and Punggol. The taxi division benefited from more cashless transactions and a larger fleet despite pricier certificates of entitlement as scrapping of older taxis was delayed.
• We expect relatively benign energy cost and currency risk this year, with the 22% jump in diesel and electricity costs so far offset by revenue growth (opex up only 3.9%). We expect Comfort will be able to hedge its diesel requirements at lower prices with the recent fall in crude. Similarly, it has US$ and the pound covered at good rates.
• More investments in Australia are being planned. The bid for Swan Taxi in Western Australia will continue until mid‐Sept. Two weeks into the bid, it already has 40% of the 90% acceptance needed. It will also require the nod from the Australian Competition and Consumer Commission. If successful, we expect a 1.5% boost to FY11 earnings.
Action & Recommendation
We maintain our BUY call on ComfortDelgro with a target price of $1.87, conservatively pegged to 17x current‐year earnings. We expect earnings upside ahead, with catalysts from improvement in the UK economy and more acquisitions overseas, especially in Australia and China.
ComfortDelgro – Kim Eng
Steady performer
Event
• ComfortDelgro reported in‐line 2Q10 results. Net profit rose by 1.6% YoY and 7% QoQ, powered by the Australian bus operations (+34%), the China driving centres (+15.5%) and the Singapore rail (+15%), taxi (+9%) and bus (+4%) services. The bottom line was hardly affected by forex translation as the weakness in the pound and the renminbi was offset by the strength in the A$. Operating margin improved despite
higher energy costs as revenue rose faster than overall operating expenses. Interim dividend was higher at 2.7 cents a share.
Our View
• ComfortDelgro’s train and taxi services in Singapore will continue to thrive on the Republic’s vibrant tourism scene. Train revenue in 2Q responded well to a 14% jump in ridership on the North East Line, which ends at HarbourFront and Punggol. The taxi division benefited from more cashless transactions and a larger fleet despite pricier certificates of entitlement as scrapping of older taxis was delayed.
• We expect relatively benign energy cost and currency risk this year, with the 22% jump in diesel and electricity costs so far offset by revenue growth (opex up only 3.9%). We expect Comfort will be able to hedge its diesel requirements at lower prices with the recent fall in crude. Similarly, it has US$ and the pound covered at good rates.
• More investments in Australia are being planned. The bid for Swan Taxi in Western Australia will continue until mid‐Sept. Two weeks into the bid, it already has 40% of the 90% acceptance needed. It will also require the nod from the Australian Competition and Consumer Commission. If successful, we expect a 1.5% boost to FY11 earnings.
Action & Recommendation
We maintain our BUY call on ComfortDelgro with a target price of $1.87, conservatively pegged to 17x current‐year earnings. We expect earnings upside ahead, with catalysts from improvement in the UK economy and more acquisitions overseas, especially in Australia and China.
ComfortDelgro – AmFraser
Margin improvement despite higher fuel cost
• ComfortDelGro Ltd’s (CD) 2QFY10 results were in line with expectations. While net profit merely inched up by 2% YoY to S$58.2mil, we are encouraged by significant business segments in Singapore and overseas, which showed operational improvements.
• 2QFY10 results were dampened by depreciation of 9% YoY in the Pound Sterling and 4% YoY in Reminbi, but it benefitted from a 10% YoY appreciation in the Australian dollar.
• Singapore accounted for 57% of revenue and 62% of operating profit, Britain 22% and 12%, Australia 12% and 15%, and China 9% and 10%, respectively.
• Ridership in Singapore grew 4% QoQ for bus to 212.1 million and 3% QoQ to 37.4 million for rail operations in 2QFY10.
• Australia bus operations enjoyed increased services which led revenue in local currency up 22% YoY. Bus revenues in China and Britain were also buoyed in local currency terms.
• Singapore bus accounts for 19% of group revenue, Britain 18%, Australia 12% and China 2%. Rail – which comprises the North-East Line (NEL) and Sengkang and Ponggol LRTs in Singapore, made up 4% of group revenue.
• Singapore Taxi which made up 22% of group revenue, improved 9% YoY on a larger operating fleet and higher volume of cashless transactions.
• Overseas, China taxi revenues also improved in local terms, but this could not offset the fall in British taxi business – which is still mired in a depressed corporate market.
• Despite a 22% YoY jump in fuel and electricity costs to S$61.5mil (making up 9% of total expenses) largely on higher oil price, operating margin improved to 12.6% in 2QFY10 (versus 12.5% in 2QFY09 and 11.8% in 1QFY10). All other cost items were reasonably contained.
• On balance, we maintain our forecast for 4% YoY p.a. growth at 10.9 cents Singapore EPS in FY10F and 11.4 cents EPS in FY11F.
• PE stands at 14.4x FY10F and 13.8x FY11F. We maintain our BUY rating with 20% upside to fair value of S$1.89/share.
ComfortDelgro – AmFraser
Margin improvement despite higher fuel cost
• ComfortDelGro Ltd’s (CD) 2QFY10 results were in line with expectations. While net profit merely inched up by 2% YoY to S$58.2mil, we are encouraged by significant business segments in Singapore and overseas, which showed operational improvements.
• 2QFY10 results were dampened by depreciation of 9% YoY in the Pound Sterling and 4% YoY in Reminbi, but it benefitted from a 10% YoY appreciation in the Australian dollar.
• Singapore accounted for 57% of revenue and 62% of operating profit, Britain 22% and 12%, Australia 12% and 15%, and China 9% and 10%, respectively.
• Ridership in Singapore grew 4% QoQ for bus to 212.1 million and 3% QoQ to 37.4 million for rail operations in 2QFY10.
• Australia bus operations enjoyed increased services which led revenue in local currency up 22% YoY. Bus revenues in China and Britain were also buoyed in local currency terms.
• Singapore bus accounts for 19% of group revenue, Britain 18%, Australia 12% and China 2%. Rail – which comprises the North-East Line (NEL) and Sengkang and Ponggol LRTs in Singapore, made up 4% of group revenue.
• Singapore Taxi which made up 22% of group revenue, improved 9% YoY on a larger operating fleet and higher volume of cashless transactions.
• Overseas, China taxi revenues also improved in local terms, but this could not offset the fall in British taxi business – which is still mired in a depressed corporate market.
• Despite a 22% YoY jump in fuel and electricity costs to S$61.5mil (making up 9% of total expenses) largely on higher oil price, operating margin improved to 12.6% in 2QFY10 (versus 12.5% in 2QFY09 and 11.8% in 1QFY10). All other cost items were reasonably contained.
• On balance, we maintain our forecast for 4% YoY p.a. growth at 10.9 cents Singapore EPS in FY10F and 11.4 cents EPS in FY11F.
• PE stands at 14.4x FY10F and 13.8x FY11F. We maintain our BUY rating with 20% upside to fair value of S$1.89/share.
ComfortDelgro – BT
ComfortDelGro Q2 profit edges up
TRANSPORT group ComfortDelGro Corporation registered a marginal 1.6 per cent increase in year-on-year net profit to $58.2 million for the second quarter ended June 30.
Revenue rose to $789.3 million, from $758.3 million a year earlier, amid growth across various business segments.
While actual revenue grew by $46.2 million, negative foreign currency translation as a result of the weaker British pound and Chinese yuan reduced this to $31 million. Group operating expenses came in at $690 million, up 3.9 per cent year on year.
Earnings per share climbed to 2.79 cents, from 2.74 cents per share in Q2 2009. For the first half, net profit was 2.5 per cent higher year-on-year at $112.5 million, while revenue was 5.5 per cent higher at $1.55 billion.
Revenue from the bus business rose 5 per cent to $399.8 million in the latest Q2, while revenue from the taxi business was 3.5 per cent higher at $238.7 million.
Revenue from the rail business at SBS Transit jumped 14.3 per cent to $30 million, as average daily ridership for the North East Line and the two LRT systems rose 14.4 per cent and 9.6 per cent respectively.
For Q2, revenue from overseas made up 43.1 per cent of total, versus 44.3 per cent a year back, as a result of the weaker British pound, though this was offset by a stronger Australian dollar. Outside Singapore, Comfort operates in six countries including China, the UK, Ireland and Australia.
On future outlook, Comfort said revenue from its Singapore bus business will be boosted by expected ridership growth, while revenue from its Australia bus operations will improve with increased services, but revenue from its UK bus business is expected to be affected by exchange rates.
Revenue from the rail business is also expected to benefit from ridership growth, while the taxi business in Singapore should register higher revenue with more cashless transactions and new taxis.
‘As global economic conditions remain uncertain, the group will continue to focus on the demand patterns of its customers, control expenses even though fuel and electricity costs will continue to pose challenges, and remain vigilant while seeking opportunities for growth,’ Comfort said.
At June 30, the group had cash and short-term deposits of $508.6 million and liquid investments of $35.1 million, for a total of $543.7 million. After offsetting borrowings of $580.8 million, it had a net debt position of $37.1 million and a net gearing ratio of 1.6 per cent.
Comfort has declared an interim dividend of 2.7 cents, to be paid on Sept 7.
Comfort’s shares closed one cent higher yesterday at $1.55.